is too much on improvements?
As for the decision to work
with what you've got or build an addition,
consider a calculation from Dean Bennett,
president of a Colorado-based design and construction
firm, who says adding square footage often
makes good sense. Here's a dollars and cents
way of looking at it: Divide the total cost
of the addition by the number of square feet
added and then compare that number to the
cost per square foot of what homes in the
area are selling for. For example, a $75,000
addition of 400 square feet would cost $187.50
per square foot. Compare that figure to the
price per square foot of recent sales of comparable
houses in the neighborhood -- 1,500-square-foot
homes would have to be selling for more than
This type of calculation is something
bankers will do when a homeowner is applying for a loan for an addition, Bennett
Still, he adds, "Determining if a home improvement
project is worth it is more often about making things more livable for the homeowner."
That's an intangible, of course. Will a more convenient and nicer bathroom make
the house worth more, in the perspective of the homeowner and/or a potential buyer?
It's hard to say.
Long and short of
How long one intends to live in the house
makes a big difference in terms of how many
improvements should be made.
two groups: homeowners with no regard to neighborhood or community environment
because they can't imagine selling, and homeowners who make improvements based
only on neighborhood/community environment so they can sell within five years.
It's important to keep in mind,
Nelson cautions, that given today's market
homeowners who have to borrow the money for
an improvement project may have a tougher
time doing so. "Underwriting guidelines
are becoming more stringent every day right
now in the residential mortgage market because
of the massive amount of foreclosures and/or
short sales happening around the country.
Therefore, if you need to borrow the money
by attaining a renovation loan or a home equity
line, expect the approval process to be a
bit harder than it was even one year ago."
of whether the money comes from savings or from a loan, make peace with the fact
that an instant and equal boost to your home's value won't happen. "There
is nothing you can do to a house that is immediately going to get you back dollar
for dollar what you spent," says Don Zeman, builder, contractor and host
of the radio show "Homefront." Take a kitchen renovation, for example.
"If you enjoy it for 10 years and it appreciates, maybe you've made a little
money on that investment. If you sell the house tomorrow, you're not going to
get your money back."